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South Africa Carbon Tax | i

Ricardo Energy & Environment

Prepared by

South Africa Carbon Tax Rethinking Decarbonisation Incentives – Policy Case

Studies

South Africa Carbon Tax

1

“ “The use of offsets allows regulated

entities to pursue finance mitigation

activities outside the jurisdiction

covered by the carbon pricing

instrument to count against its

requirements”

Climate Reality Project.

This case study has been developed for the UK’s Energy Systems Catapult under the Rethink ing

Decarbonisation Incentives project, aiming to draw lessons from international experience of policies to

improve the framework of economic drivers for decarbonisation in the UK.

South Africa has undertaken a decade long journey to implement the ambitious multi-sectoral carbon

tax with accompanying revenue recycling and offsetting mechanisms. In order to address the plethora

of concerns about costs to the sectors covered, and the different impacts of these costs, a complex

system of thresholds and exemptions has been developed. Also, the tax must sit alongside the carbon

budget system, which raises questions about how the two will interact.

The case study provides findings on the extent to which such a broad-based policy can deliver a

consistent carbon price signal throughout an economy, and the technical and political challenges faced.

It explores the design of the tax, including its point of regulation, the exemptions or allowances granted

to specific sectors, and rationale behind these. In addition, measures to deal with issues of international

competitiveness, such as the use of offsets, are also examined.

Key findings • For the past decade, South Africa has sought to formulate a carbon tax that is effective in its

operation, equitable in its impact across different sectors, and minimal in its adverse impacts.

The design of the carbon tax is intended to balance South Africa’s climate change mitigation

goals with the need to reduce poverty and maintain trade competitiveness, while providing a

price signal to encourage the transition to a low-carbon economy.

• As a result of the policy consultation process, numerous deviations from a uniform price signal

reduce the effective tax rate significantly in the first phase. Political realities and sectoral differences

have meant that the tax design has evolved significantly, incorporating a number of exemptions,

phasing, offsetting and revenue recycling.

• Agriculture, forestry and other land uses (AFOLU) and waste are not included in first phase, but

can be a source of offsets. These sectors were excluded due to difficulties in measuring and

verifying their emissions. If in the future these sectors are covered by the tax regime, existing

offsetting projects will be allowed to continue, however no new projects will be permitted.

• There is still uncertainty about how the overlapping carbon tax and carbon budget policy will be

aligned going forward. The government has still to provide clarity on the alignment of the

systems post 2020.

• While South Africa has the vision for a low carbon transition, the lack of coherence in mitigation

policy creates uncertainty for stakeholders. Work is yet to be done to design policies with clear

frameworks and timeframes to aid stakeholder decision making.



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Abbreviations

Nomenclature

GHG Greenhouse gases

tCO2e Tonnes of carbon dioxide equivalent

R South African Rand

USD United States dollar

Copyright statement and disclaimer This report forms part of the Energy Systems Catapult project ‘Rethinking Decarbonisation

Incentives’ co-funded by the Energy Technologies Institute. This report is the Copyright of Energy Systems Catapult and has been prepared by Ricardo Energy & Environment, a trading name of Ricardo-AEA Ltd under contract ESC1764 dated 19/02/2018. The contents of this report may not

be reproduced, in whole or in part, nor passed to any organisation or person without the specific prior written permission of Energy Systems Catapult. Ricardo Energy & Environment accepts no liability whatsoever to any third party for any loss or damage arising from any interpretation or use

of the information contained in this report, or reliance on any views expressed therein, other than the liability that is agreed in the said contract.

AFOLU Agriculture, forestry and other land uses

BAU Business as usual

BEPS Base erosion and profit shifting

CCBS Climate, Community and Biodiversity Standard

CDM Clean Development Mechanism

CIT Corporate income tax

CPI Consumer price index

DEA Department of Environmental Affairs

DNA Designated National Authority

DOE Designated operational entity

ETS

GS

Emissions Trading Scheme

Gold Standard

IEP Integrated Energy Plan

IMF International Monetary Fund

IPCC Intergovernmental Panel on Climate Change

LTMS Long Term Mitigation Scenarios

NAEIS National Atmospheric Emissions Information System

NCCRP National Climate Change Response Policy

NDC Nationally Determined Commitment

NDP National Development Plan

SARS South African Revenue Service

VCS Verified Carbon Standard


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Policy overview Policy narrative

A carbon tax in conjunction with the recycling of revenues has been designed by the South African

National Treasury as one of the key mitigation instruments to help the country to meet its climate targets.

The formal process to develop the tax began in 2006 with a Fiscal Reform Policy Paper. The tax rate

and design were then established in the 2013 Carbon Tax Policy Paper. However, following significant

consultation with stakeholders and in recognition of the need to provide taxed entities with flexibility, the

2014 budget review announced that a carbon offsets scheme would be introduced to complement the

tax. In 2015, a new Draft Carbon Tax Bill was released for public consultation, including a gradual

phasing in of the tax, followed by a second iteration in December 2017. The actual date of

implementation is 1 January 2019, as announced in the 2018 Budget. This development timeline is

illustrated in Figure 1.

Figure 1 A summarised timeline of South Africa's key carbon policy updates. The expected

implementation of the carbon tax is 2019.

Coverage, obligated entities and eligibility

The emissions profile in South Africa in 2014 is shown in Figure 2 (note that net land-use change and

forestry emissions are excluded). The carbon tax will cover all energy emissions in South Africa (approx.

90% of overall emissions) by regulating the upstream fuel suppliers, however, phase one of the tax

regime will exclude agriculture, forestry and other land uses (AFOLU) and waste due to difficulties in

measuring and verifying emissions.

Targeted entities will be liable for: i) fossil fuel combustion emissions, ii) industrial processes and

product use emissions and iii) fugitive emissions (i.e. from coal mining). Only entities with a thermal

capacity of around 10 megawatt (MW) will be subject to the tax in the first phase (2019-2021). The

GHGs covered by the scheme include Scope 1 emissions: carbon dioxide, methane, nitrous oxide,

perfluorocarbons, hydrofluorocarbons and sulphur hexafluoride.

Second Draft

Carbon Tax Bill

Iteration of the

first, published

for public

consultation

Carbon offset

paper

Proposal of the

offsetting

mechanism

Discussion Paper on Carbon

Taxes and National Climate

Change Response Policy

Paper - proposed carbon tax to

deliver emission reductions at

least cost the economy.

Environmental Fiscal

Reform Policy Paper of

2006 proposed carbon

pricing through a carbon

tax to internalise

environmental externalities

2006 2010 2013 2014

Draft Carbon

Offset

Regulation

2016 2017

First Draft

Carbon Tax Bill

Iteration of the

first, published

for public

consultation

2015

Carbon Tax policy

paper: revision of

the Discussion

Paper accounting

for stakeholder

feedback


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Figure 2 Total GHG emissions in South Africa 2014 (MtCo2e)1

Mechanism and economic incentive

The first phase of the tax will run from 2019 up to 2022 and will be introduced gradually to allow for a

smooth transition in adopting cleaner and more efficient technologies and behaviours . The initial carbon

tax rate will be set at R120 ($8.32 USD) per tonne of CO2e (carbon dioxide equivalent) and will increase

at consumer price index (CPI) + 2% up to 2022, after which it will increase at CPI. In the initial phase,

obligated entities will have a basic tax-free allowance of 60%, but a number of additional tax-free

allowances will also apply (for process emissions, trade exposed sectors; top performers, those subject

to the carbon budget, and those included in the first phase). The combined effect of these tax -free

allowances will be capped at 95% of total GHG emissions. Furthermore, offsets can be used by firms

to reduce their carbon tax liability up to a set limit (5-10% of actual emissions of a taxable company).

Taking into account tax-free allowances, the effective tax rate will be in the range between $0.42 USD

and $3.33 USD (R6 and R48) per tonne. The features of the tax are illustrated in Figure 3.

1 Based on data f rom CAIT Climate Data Explorer. 2017. Washington, DC: World Resources Institute. Av ailable online at: http://cait.wri.org

Industrial Processes, 22

(4%)Agriculture, 30

(6%)

Waste, 19 (4%)

Energy -Electricity/Heat,

295 (56%)

Energy -

Manufacturing/Construction,

55 (10%)

Energy -

Transportation, 53 (10%)

Energy - Other Fuel

Combustion, 42(8%)

Fugitive Emissions, 9

(2%)

http://cait.wri.org/


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Figure 3 Conceptual model describing the key elements of the proposed carbon tax regim in South Africa

Compliance

The taxpayer must pay the carbon tax for every tax period. The tax will be based on appropriate

emissions factors or a transparent and verified measuring and monitoring procedure as outlined in the

2017 Mandatory GHG Reporting Emissions Regulations. Under the regulation, entities are required to

report all their GHG emissions based on a combination of Tier 1 emissions factors as per the IPCC

2006 Guidelines and Tier 2 and 3 approved emissions methodologies at a country or company level,

respectively.

Tax on fuels will be imposed on fuel suppliers, as an addition to the current fuel taxes. For taxation on

stationary emissions, reporting thresholds (equivalent to the tax rate threshold) will be determined by

source category as stipulated in the National Environmental Air Quality Act. The proposed carbon tax

regime includes tax avoidance and tax evasion provisions, together with monitoring and enforcement,

in the design of the carbon tax.

Institutional set-up

The Minister of Finance is responsible for the final tax rate, exemptions, and the actual date of

implementation through the annual Budget process. The South African Revenue Service (SARS) will

be responsible for administering the Carbon Tax and accessing and monitoring the National

Atmospheric Emissions Information System (NAEIS), which contains emissions information as reported

by companies. The Department of Energy will be responsible for administering the carbon offset

scheme. Energy use data reported to the Department of Energy could also be incorporated into the

NAEIS, and strengthen the monitoring and verification system to support the implementation of the

carbon tax.

Effectiveness and cost effectiveness

The tax has not yet been implemented so it is not possible to comment on its likely effectiveness.

Point of regulation The regulated entity in a carbon tax can be the direct emitter or be upstream or downstream in the

supply chain of the goods and services that result in those emissions . For instance, a direct emissions

(commonly called a point of emissions) approach focuses on the facilities that are the chief sources of

Carbon Tax Send price

signal

R120 per tonne of

CO2e

Behavioural change

for prosumers

Reduction in GHG

emissions & energy

consumption

Meet international

climate change

targets Job creation by

industry stimulation Flexibility

mechanisms

Offsetting 5-

10% of CO2

emissions

Tax allowances

60% of CO2

emissions

Further allowances for:

process emissions, trade

exposed sectors & top

performers

Revenue recycling options


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CO2 emissions such as motor vehicles, farms, industrial installations, power plants, and other stationary

sources2,3. Such an approach can be suitable where there are a relatively small number of very large

emitters, but the administrative costs would be very high if it were to be applied to very large number of

small emitters, for instance in the residential or domestic transport sectors.

In an upstream approach, a carbon tax attributes responsibility for CO2 emissions to the importer,

producer or supplier of fuels. This approach has the greatest capacity to guarantee that all sources of

energy related CO2 emissions are targeted, as the focus is on the point in which carbon enters the

economy. It is administratively simpler as there are far fewer suppliers of energy than there are

consumers. Placing the carbon tax liability on fuel suppliers will likely result in an increase in fuel costs

for consumers4. This essentially passes the tax down the producer-consumer chain, creating incentives

for fuel alternatives and investments in energy-efficient technologies that decrease CO2 emissions.

In a downstream approach a tax is imposed on the outputs whose production involves the combustion

of fossil fuels. The most common example is electricity, although it could apply to heat products or in

principal any product or service with embodied carbon. It is very challenging to consider this approach

for complex end user products because of the need to attribute emissions to them, but is more

straightforward for electricity, where the associated emissions can be calculated more accurately.

These are the main options available for the design of a carbon pricing system, and a mix could be

employed to cover diverse sectors. For the South African carbon tax, the Discussion Paper on carbon

tax published in 20105, proposed three options for implementing a comprehensive carbon price via a

tax system. These were: i) tax applied directly to measured GHG emissions; ii) fossil fuel input tax on

coal, crude oil and natural gas, based on their carbon content; and iii) tax levied on energy outputs

(electricity and transport fuels). Initially it was believed that the best option was to impose the tax on the

direct emitter of GHGs or CO2-eq. However, at the time this approach was recognised to be

administratively complex and costly, particularly regarding the implementation of a much needed

transparent and effective institutional framework6.

In addition, financial risks and technical and administrative challenges associated with the

measurement and monitoring of process emissions resulting from the chemical reactions of certain

manufacturing processes such as cement, glass, aluminium and chemicals production as well as

fugitive emissions deriving from coal mining raised further concerns. Following extensive consultations,

a preference for a carbon tax with a mixed approach to the point of regulation emerged: taxation on fuel

inputs (upstream) in combination with a tax on process and fugitive emissions at source (point of

emissions) for some of the large industry players.

This combination of an upstream and point of emissions approach to carbon taxation offers key

advantages including: i) fewer players involved (and therefore lower costs); ii) a simpler structure,

minimising opportunity for abuse and risk, and; iii) a lower administrative burden by building on existing

accounting systems7

2 Newham, M., & Conradie, B. (2013). A Critical Rev iew of South Af rica’ s Carbon Tax Policy Paper: Recommendations f or the Implementation of

an Of f set Mechanism, (334), 1, 5,14. Retriev ed f rom http://cssr.uct.ac.za/pub/wp/334 3 Hughes, R., and Paterson, A. (2017). A Critical Rev iew of South Af rica’s Future Carbon Tax Regime. Institute f or Marine and Env ironmental Law

Univ ersity of Cape Town. MPhil Thesis, pp.89. 4 Mansur, E. T. (2013). Upstream Versus Downstream Implementation of Climate Policy . NBER Working Paper, 53(9), 1689–1699.

https://doi.org/10.1017/CBO9781107415324.004 5 National Treasury . (2012). Discussion Paper f or Public Comment: Reducing Greenhouse Gas Emissions, Carbon Tax Option December 2010:

30(March), 1026–1034. 6 National Treasury . (2013). Carbon tax policy paper - reducing greenhouse gas emissions and f acilitating the transition to a green economy .

Pretoria, South Af rica: Gov ernment Printer 7 According to a representativ e of the South Af rican National Treasury , directly inv olv ed in the dev elopment of the carbon tax , interv iewed f or this

work


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The carbon tax will primarily be administered by SARS together with the Department of Environmental

Affairs (DEA). The collection costs for the carbon tax are expected to be minimised through the

appropriate usage of economies of scale and the existing administrative structures. It is therefore

favourable that these existing structures of SARS and the DEA are utilised to minimise the

administrative burden.

Revenue recycling The National Treasury believes that implementing a carbon tax instead of a cap-and-trade system is

the right choice due to the oligopolistic structure of industries (i.e. few large emitters) and given the high

costs of setting up and enforcing a cap-and-trade scheme in South Africa. While a carbon tax will not

guarantee that environmental targets are reached, it will provide the price stability needed to encourage

firms to make long-term investment decisions and commit resources to research and innovation in

emissions reduction.

However, there are concerns about the cost impacts of a carbon tax on the competitiveness of firms

operating in international markets and on vulnerable individuals given the widespread poverty and

inequality in South African society. In addition, supplementary measures may also be needed to fully

support the transition to a lower carbon economy.

To address these concerns the Treasury announced that a revenue recycling system with a soft

earmarking will be implemented to complement the carbon tax regime. This system utilises some of the

revenue gained from the carbon tax which will flow into the National Revenue Fund for funding of

efficiency investments and low-carbon projects and a tax incentive for energy efficiency8 as well as

other public systems (Box 1).

However, industry and some businesses were concerned whether the revenue recycling would effect ive

as the lack of ring-fencing provides no guarantees that the revenue will be used to for the green

8 Yu L and Lu Y. 2015. The Economic Impact of Dif ferent Carbon Tax Rev enue Recy cling Schemes in China: A Model-Based Scenario Analy sis.

(141) Applied Energy 97.

Box 1 Key elements of the proposed revenue recycling system.

In the media statement which accompanied the first draft Carbon Tax Bill , the National Treasury has

indicated that revenue recycling will be used to protect vulnerable households . The carbon tax will

be revenue-neutral during the first phase and these revenue recycling measures will include:

(i) Funding for the energy efficiency tax incentive already being implemented;

(ii) A reduction in the electricity levy,

(iii) Additional tax relief for roof top (embedded) solar photovoltaic (PV) energy as already

provided for the in 2015 tax legislation;

(iv) A credit for the premium charged for renewable energy (wind, hydro and solar, as per

the Integrated Resource Plan);

(v) Additional support for free basic electricity to low income households, and;

(vi) Additional allocations for public transport. Measures to encourage the shift of some

freight from road to rail will also be supported.

In the absence of a carbon tax, the electricity levy is currently fulfilling the twin objectives of promoting

energy efficiency and indirectly pricing GHG emissions. To ensure the effective pricing of carbon

without double taxation, upon the introduction of the carbon tax, a credit of the electricity generation

levy is proposed for the first phase (up to 2022).


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investment. As part of the consultation process of the 2015 Draft Bill, they sought assurances from the

government that “the carbon tax will be revenue-neutral and that clear guidelines be developed to inform

how the revenue will be allocated to ensure transparency.” 9 In addition, several respondents supported

the explicit earmarking of funds.

In their response, the government explained that the rigid earmarking of specific tax revenue streams

would not be in line with sound fiscal management practices. Instead, “soft” earmarking (on budget

allocations) was proposed, such as the enhanced free basic energy / electricity programme and

improved public transport. In addition, the government pointed out that some of the measures promised

were already underway, such as tax shifting measures (the credit for the renewable energy premium is

already incorporated in the Draft Carbon Tax Bill) and tax incentives (the energy efficiency savings tax

incentive was implemented in November 2013 and is encoded in legislation as section 12L of the

Income Tax Act.) 10

Detail of how the revenue recycling will be divided amongst these measures is still pending. This will

determine the scale of the distributional effects. The choice of revenue recycling, whether by specific

programmed support or a reduction in corporate income tax (CIT), impacts on corporate decision

making. It was the intention of the Policy Paper and the gradual implementation of the carbon tax to

provide firms with clear signals. the same level of clarity does not yet exist for revenue recycling.

Carbon tax allowances The carbon tax was developed by the National Treasury to provide a price signal to producers and

consumers of carbon-intensive products, creating an incentive to invest in cleaner technology and

reduce emissions, where available. The phased approach should allow for a relatively smooth transition

to a carbon pricing regime that provides the necessary policy and price signals to investors and

consumers of the need to ensure that future investments are more climate resilient.

A number of tax allowances or rebates are defined in for the South African Carbon Tax Policy, as shown in Table 1. The following are provided for:

Basic tax-free allowance for fuel combustion emissions. Most sectors of the economy have a 60%

tax free allowance for energy combustion emissions, meaning that they don’t have to pay tax for that

amount of their emissions. The basic tax-free allowance was a blanket technical threshold applied to

all sectors as part of the phasing in of the tax, allowing participants to adapt to it and arbitrarily

representing an allowable level of emissions space for sectors, above which the tax would apply 11.

Allowance for process and fugitive emissions. As GHG emissions from many chemical processes

occur in fixed stoichiometric ratios (e.g. coal gasification, crude oil cracking and the production of

cement, iron, steel, glass, ceramic and certain chemicals, such as calcium carbide and titanium dioxide),

there is limited potential for mitigation over the short to medium term12. Reductions in CO2 would require

completely novel processes to be developed, based on different chemical reactions , which in many

cases is not possible. To address this, all manufacturing sectors which produce process emissions were

granted a higher basic allowance of 70%13 (e.g. iron and steel, cement, lime, glass). In addition, an

allowance of 10% is available for fugitive emissions, exemplified by the coal mining sector.

9 National Treasury , First Draf t Carbon Tax Bill 2015: Response Document, December 2017 10 National Treasury , First Draf t Carbon Tax Bill 2015: Response Document, December 2017 11 According to a representativ e of the South Af rican National Treasury , directly inv olv ed in the dev elopment of the carbon tax , interv iewed f or this

work. 12 Dav is Tax Committee. (2015). Report on a carbon tax f or South Af rica f or the minister of f inance, (Nov ember). Retriev ed from

http://www.taxcom.org.za/docs/20171110 DTC report on carbon tax - on website.pdf 13 National Treasury , Explanatory Memorandum f or The Carbon Tax Bill 2017, December 2017


9

Allowance for trade exposed sectors. A further trade exposure allowance of 10% for all sectors

except waste and AFOLU (which have been excluded completely from the initial scope of the tax , see

below) has been granted, since trade-exposed firms will be at an initial disadvantage after the

introduction of the tax. Trade intensity will be used as a proxy for trade exposure which will be

determined at a sector or subsector level.

Performance allowance. The allowance for top performers (5%) is an incentive for early movers and

for those who reduce their carbon intensity voluntarily. This will be calculated with reference to an

agreed GHG emissions intensity benchmark (including both direct and indirect emissions) for the sector

or sub-sector. Essentially, firms below the sector or subsector emissions intensity benchmark will be

rewarded.14

14 National Treasury , Explanatory Memorandum f or The Carbon Tax Bill 2017, December 2017


10

Table 1 Proposed emissions thresholds and offset allowances.15

Sector

Basic Tax-

free

allowance for

fossil fuel

combustion

emissions%

Basic Tax-

free

allowance for

process

emissions%

Fugitive

Emission

Allowance %

Trade

Exposure

Allowance %

Performance

Allowance %

Carbon

budget

allowance

Offsets

allowance %

Max. total

allowance%

Electricity 60 0 0 10 5 5 10 90

Petroleum

refining 60 0 0 10 5 5 10 90

Manufacturing

(heat and

electricity)

60 0 0 10 5 5 10 90

Iron and steel

(IPPU) 0 70 0 10 5 5 5 95

Cement, lime,

glass (IPPU) 0 70 0 10 5 5 5 95

Agriculture,

forestry and

land use

100 0 0 0 0 0 0 100

Solid Waste 100 0 0 0 0 0 0 100

Fugitive

emissions

from coal

mining

60 0 10 10 5 5 5 95

Civil aviation,

road transport 60 0 0 10 5 5 10 90

15 Adapted f rom - National Treasury , Draf t Carbon Tax Bill 2017, December 2017


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Carbon Budget allowance. An additional 5% tax-free allowance will be provided to companies

participating in phase 1 of the carbon budget system as an incentive for participation.16 The carbon

budget allowance is described in Box 2. However, the government has still to provide clarity on the

alignment of the carbon tax and carbon budgeting system post 2020, when the mandatory phase of the

carbon budgeting system is expected to commence. At this stage, there is a high level in principle

agreement that the tax will apply above the carbon budgets or absolute thresholds. 17

After three years of implementation the impact of the carbon tax and budgets on emissions and the

overall economy will be assessed, including an assessment of cost-effectiveness, to inform how the

two instruments are aligned. One of the key considerations for the integration options will be the level

of stringency of the carbon budgets. Although the budget provides flexibility to adjust the cost borne by

companies, entities covered by the system may experience significantly higher cost than the tax rate.

Offset allowance. The carbon tax provides for the use of carbon offsets by companies to reduce their

tax liability by a maximum of 10% of their combustion emissions and 5% of their total fugitive emissions

or 5% of their total process emissions. 18

Exclusion of waste and AFOLU sectors. These sectors are excluded during the initial phase of the

carbon tax due to difficulties in measuring and verifying their emissions. However, it should be noted

16 National Treasury , Explanatory Memorandum f or The Carbon Tax Bill 2017, December 2017 17 According to a representativ e of the South Af rican National Treasury , directly inv olv ed in the dev elopment of the carbon tax, interv iewed f or this

work 18 National Treasury , Explanatory Memorandum f or The Carbon Tax Bill 2017, December 2017

Box 2 Carbon budget allowance

A series of carbon budgets designed by the DEA envisaged to provide a GHG emissions allowance

(in other words, a cap), against which physical emissions arising from the operations of a company

during a defined time period will be tracked. In the period to 2020, the carbon budgets will not be a

compliance instrument but rather will be used to increase understanding of the emissions profile of

participating companies, and to establish monitoring, reporting, and verification (MRV) processes.

Beyond 2020, they are intended to become compulsory.

In the period to 2020, the integration between the two instruments is to be established. Firms that

have been allocated carbon budgets by the DEA will be entitled to an additional 5% tax free

allowance. This is in addition to a basic tax-free allowance of 60% plus other allowances that will be

provided for firms if, for example, they are considered to be exposed to the risk of carbon leakage or

if they have significant process emissions.

Carbon budgets define a maximum emissions allowance, however, their effectiveness depends on

the tightness of the budget and the compliance mechanism used to enforce the budget (World bank,

2017). The costs to the companies involved will depend on the stringency of the allowance and

entities within budgets may not face significant cost increases. By contrast, a carbon tax creates

additional cost on liable entities in relation to their emissions although tax exemptions (as proposed

in South Africa) can reduce this impact. Through the level of carbon budgets or use of tax free

allowances the systems can respectively be designed to mitigate competitiveness concerns.

There are expected to be interactions between the carbon tax design and carbon budget system,

however these are difficult to quantify in advance and uncertainty exist as to how they will affect each

other and the economy. While both the carbon tax and carbon budget instruments have merits,

economic theory would suggest that there could be risks associated with applying both instruments

to the same emissions at the same time. Policy duplication would increase administration costs as

well as duplicate participant compliance costs.


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that the Draft Carbon Tax Bill has included combustion related emissions (only) from the AFOLU sector

as taxable, as these will be regulated upstream.19 However, these sectors will be able to provide offsets

to other liable entities, and a number of offset projects have been registered under Clean Development

Mechanism (CDM), Verified Carbon Standard (VCS) and Gold Standard (GS) in these sectors.

In the medium term, and to the extent that the challenges mentioned are addressed, it has been

suggested that the AFOLU and waste sectors may be brought into the carbon tax system. However,

there is still uncertainty of whether or when this will happen. If in the future they were to be covered by

the tax, then where offset projects overlap with the scope of the tax the existing projects would be

allowed to continue until the crediting period of that project comes to an end. However, no new project

would be eligible for offsets. This would preserve the incentive for current project developers to continue

developing their offset projects.

Allowance for electricity sector. The sector has a maximum allowance of 90%. According to a

government interviewee,20 unlike other sectors, the electricity sector allowance is lower than other

sectors (rather than 95%) as this takes into account the broader suite of mitigation opportunities

available for electricity generation. According to the National Development Plan (NDP), the

uncompetitive and monopolistic structure of the electricity sector means that an explicit carbon price

could provide an incentive for the efficient use of the current fleet of power stations and thus maximise

efficiency gains.9

The impacts of the tax rate on electricity prices is still uncertain. The National Treasury estimates that

every effective R10 per ton CO2 emissions tax translates into a 1.05 c/kWh addition to the electricity

price. Hence, the impact on electricity prices will be between 5.5% (assuming only 60% tax free

allowance) to less than 3%. However, during the first phase the carbon tax is expected to have a neutral

impact on the electricity prices. This will be offset through a credit for the currently electricity generation

levy (applied to coal, petroleum, natural gas and nuclear based electricity at R0.03/kWh) against the

carbon tax liability of electricity producers and a credit for the renewable energy premium built into the

current electricity price structures.

Conclusions regarding tax allowances The carbon tax policy proposal and draft carbon tax bill represent important schemes to drive a shift to

a low carbon intensity economy. Their various elements are designed to protect industries against

competition and trade exposure consequences as well as other sector specific disadvantages in the

short term, through allowances and the use of offsets. There exist a number of concerns, however, with

regard to the consistency of the price signals these combined measures generate. The deviation from

having a single carbon price across the economy is due mainly to measures to mitigate potential

adverse impacts of the tax on both industry and households in the short term. Over the medium to

longer term, the different allowances could be reduced and even removed to ensure a consistent and

stronger carbon price signal.21

Due to the use of tax-free allowances, the effective tax rates of all sectors will be significantly less than

R120/t CO2e. Assuming zero offsets, the maximum effective tax rate in the electricity sector for example,

would be R48/tCO2e or US$ 4/tCO2e in the first year. This is about 4 %of that proposed in the Stern

Review22. This effectively translates to a rebate from the “economic price signal” which the tax imposes.

19 National Assembly . (2015). Draf t carbon tax bill. Pretoria, South Af rica: Gov ernmentPrinter. 20 According to a representativ e of the South Af rican National Treasury , directly inv olv ed in the dev elopment of the carbon tax , interv iewed f or this

work 21 According to a representativ e of the priv ate sector with a background in env ironmental consulting and sustainability , interv iewed f or this work. 22 Stern, N. (2006). Stern Rev iew on the Economics of Climate Change. London, UK: HM Treasury .


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It is intended that, after 2020, the tax-free thresholds would be reduced and could ultimately be replaced

by absolute emissions thresholds however whether this will be achieved is unclear.

To conclude, the proposed carbon tax rate is relatively low taking cognisance of the high level of tax

free allowances. According to analysis undertaken by the International Monetary Fund (IMF), a carbon

tax is likely to produce domestic environmental benefits (primarily health benefits from less local air

pollution) equivalent to about R150 or US$ 10 per ton of reduced CO2. If a carbon tax is the main

instrument for reducing CO2 emissions, the IMF suggests that the rate will need to be ramped up quite

substantially by 2030 to meet the country’s Nationally Determined Commitment (NDC) under the Paris

Agreement23.

Carbon offsetting scheme Carbon offsetting is permitted within the carbon tax for south Africa. The section examines the reasons

for this and how it will work in practice.

Policy Rationale Carbon offsetting entails the purchase of carbon credits that represent emissions savings from projects

individually or programmes of projects. Firms and governments voluntarily wishing to reduce their

carbon footprint for public relations or corporate social responsibility reasons may do so by acquiring

offsetting credits, in effect funding the mission reducing activities. A voluntary market for such credits

exists in South Africa and although growing it is small, covering less than 0.1% of country’s total

emissions in 201124.

Alternatively, governments may permit carbon offsets to be used for compliance in mandatory carbon

pricing regulations, such as carbon taxes or emission trading systems. This extends the scope of

potential abatement options and allows for emission targets to be met more cheaply. For liable entities

this is manifested in the opportunity to acquire cheaper emission reductions credits, when compared

with the regulated carbon price. The Carbon Tax Policy Paper allows firms to offset 5-10 %of emissions

based on their mitigation potential.

For a project to be eligible under the offset scheme, it requires certification of the emissions reductions

achieved. this in turn means that emissions reductions need to be verified. This is undertaken by an

independent designated operational entity (DOE). As of 2014, there was only one accredited DOE in

South Africa although two other entities had expressed an intention to become accredited25. For the

first phase of the carbon tax, it is proposed that projects registered under the CDM, VCS, and GS

standards be considered for offsets. The Designated National Authority (DNA) within the Department

of Energy has been appointed as the administrator of the carbon offset mechanism. Thus, the

international carbon-offsets standard bodies will have to establish a memorandum of understanding/

contract with the DNA to ensure that the development of the carbon-offset projects would be aligned

with requirements and criteria as set out in the Carbon Offsetting Regulations.26

23 National Treasury . (2017). CARBON TAX BILL (Annexure 3): FIRST DRAFT CARBON TAX BILL 2015 Response Document, (December), 1–

31. Retriev ed f rom http://www.treasury .gov.za/public comments/CarbonTaxBll2017/Annexure 3 Response Document to 2015 Draf t Carbon Tax

Bill.pdf 24 Peters-Stanley , M., and K. Hamilton. 2012. State of the Voluntary Carbon Markets 2012, Vol. 6. USA: Ecosy stem Marketplace & Bloomberg

New Energy Finance. 25 Dav is Tax Committee. (2015). Report on a carbon tax f or South Af rica f or the minister of f inance, (Nov ember). Retriev ed from

http://www.taxcom.org.za/docs/20171110 DTC report on carbon tax - on website.pdf 26 According to a representativ e of the South Af rican National Treasury , directly inv olv ed in the dev elopment of the carbon tax , interv iewed f or this

work


14

Offset projects in South Africa It has been envisioned that investment in offsets could generate considerable sustainable development

benefits in South Africa, including the channelling of capital to rural development projects, the creation

of employment, restoration of landscapes, reductions in land degradation, protection of biodiversity, and

the encouragement of energy efficiency and low carbon growth27. The use of carbon offsets to assist

sectors to reduce their carbon tax liability was generally supported by stakeholders and is seen as a

cost-effective measure to incentivise GHG emissions reduction in sectors not covered by the tax.

The principles of ‘real, additional and permanent’ are pivotal to ensuring the credibility of carbon offset

projects. The carbon offset component of the carbon tax has a dual purpose: to serve as a flexibility

mechanism that will enable industry to deliver least cost mitigation, i.e. mitigation at a lower cost to what

would be achieved in their own operations, and thereby lower their tax liability; and to incentivise

mitigation in sectors or activities that are not directly covered by the tax and/or benefiting from other

government incentives, especially, transport, AFOLU, waste.

It has been proposed that, among other aspects:

• Credits for projects based only in South Africa be used for offsets. This would promote local

sustainable development and job creation as well as supporting the efforts of the National

Climate Change Response Policy (NCCRP).

• The projects are outside the scope of activities that are subject to the carbon tax. Only entities,

not liable for the carbon tax would be permitted to implement emission reduction projects and

sell carbon offset credits to entities liable to the carbon tax. These entities would initially include

those in tax exempt sectors and those below the tax threshold in other sectors.

• An initial list of eligible projects would be used to stimulate an offsets market. This set would be

expanded with time.

International competitiveness considerations The competitiveness effects on local industries and businesses as well as other facets of the economy

(for example employment, inflation and international competitiveness) is critical when evaluating an

environmental tax and is also affected by the tax base and tax rate28. The implementation of an

environmental tax will result in economic effects as a policy intervention characteristically aims to

change the behaviour of taxpayers. Garnering a sufficient understanding of the nature and magnitude

of the economic knock-on effects is significant to reduce any unfavourable competitiveness

consequences. This is particularly true for trade intensive industries in South Africa, a sector which

accounts for 15 %of the country’s GDP (Figure 4 and Appendices 2).

27 Camco Clean Energy . (2012). Use of carbon of f sets under a South Af rican carbon tax regime. Johannesburg, South Af rica: Af rica Clean

Energy . 28 Ekins and Speck (1999). National Treasury Market-Based Instruments: Draf t Policy Paper. Env ironmental and Resource Economics 386:

(13)62.


15

Figure 4 Contribution per industry to South Africa's nominal GDP in 2016.29

Trade intensive industries have been variously defined as those in which exports and imports combined

represent more than 40% or 60% of their domestic output30. The competitiveness issues affecting these

industries are mostly expected to occur in the instance whereby environmental taxes are imposed on

products or key elements of production that are internationally traded. For the industries and firms that

are subjected to international competition, the possibility to transfer the tax burden through the

imposition of higher prices is largely limited31. This is due to the restricted sphere of influence that local

industries have on international price control.

To address this, the National Treasury has proposed an additional tax-free allowance for trade-exposed

industries rather than the use of border carbon adjustments (the imposition of a domestic tax on

imported goods)18. The trade exposure allowance is sector-based including exports and imports. Trade

intensity will be used as a proxy for trade exposure which will be determined at a sector or subsector

level based on the World Customs Organisation - Harmonised System Convention classification and

available national data for the corresponding production per sector. 32

This scheme would reduce the risk of exports being subject to border carbon adjustment tariffs and

would allow for the early development and/or implementation of cleaner technologies such as the

development of technologies for carbon capture and storage.33 Moreover, it should be noted that as the

scope and coverage of carbon pricing increases globally, the impacts on competitiveness are l ikely to

be less of a concern. 34

29 South Af rica Market Insights, South Af rica's trade industry looked at in more detail, Nov ember 2017, URL:

https://www.southaf ricanmi.com/blog-2nov 2017.html, [accessed 20/05/2018] 30 Jooste, M., Winkler, H., Van Sev enter, D., & Truong, P. (2009). The ef f ect of response measures to climate change on South Af rica’s economy

and trade. Final report to the Department of Env ironmental Af f airs. Cape Town, South Af rica: Univ ersity of Cape Town. 31 Dav is Tax Committee. (2015). Report on a carbon tax f or South Af rica f or the minister of f inance, (Nov ember). Retriev ed from

http://www.taxcom.org.za/docs/20171110 DTC report on carbon tax - on website.pdf 32 National Treasury , Explanatory Memorandum f or The Carbon Tax Bill 2017, December 2017 33 National Treasury . (2013). Carbon tax policy paper - reducing greenhouse gas emissions and f acilitating the transition to a green economy .

Pretoria, South Af rica: Gov ernment Printer. 34 According to a representativ e of the South Af rican National Treasury , directly inv olv ed in the dev elopment of the carbon tax, interv iewed f or this

work

Agriculture, 2%

Finance, 20%

Government,

17%

Trade, 15%

Manufacturing

, 13%

Transport &

Communication, 10%

Mining, 8%

Personal

services, 6%

Construction,

4%Electricity, 4%

https://www.southafricanmi.com/blog-2nov2017.html


16

Key findings This case study has explored the proposed carbon tax policy in South Africa with the aim of assessing

the consistency of the price signals that this tax is sending into the economy and to inform possible

reform options for the UK.

For the past decade, South Africa has sought to formulate a carbon tax effective in its operation,

equitable in its impact across different sectors, and minimal in adverse impacts on the economy.

Carbon taxes whether imposed directly on the emission of carbon or the use of products which generate

carbon emissions35 are receiving growing global attention. The design of the carbon tax is intended to

balance South Africa’s climate change mitigation goals with the need to reduce poverty and maintain

trade competitiveness. While providing a price signal to encourage the transition to a low-carbon

economy, the proposed policy is also intended to reduce the risk of negative competitiveness

implications and leakage through special provisions for sectors considered to be at risk 36. Although yet

to be finalised, several policy documents have provided a clear indication of its anticipated form and

2015 saw the publication of the Draft Carbon Tax Bill with the second draft Bill released in 2017, for

public comment, and submission to Parliament for processing in 2018.

Political realities and sectoral differences have meant that the tax design has evolved

significantly, incorporating a number of exemptions, phasing, offsetting, and revenue recycling.

As one interviewee highlighted, the inconsistent treatment of these allowances is the result of policy

consultation process. The tax will be implemented gradually over time in a series of phases, with the

provision of a number of allowances and tax concessions made by the government, as well as offsetting

provisions for greater flexibility. The allowances applied in the first phase include those for trade

exposed economic sectors subject to international competitiveness, industry players responsible for

fugitive and process carbon emissions and other economic sectors where monitoring, verification and

measurement is challenging (e.g. AFOLU, waste). An important revenue recycling mechanism,

involving soft earmarking (enhanced free basic energy, improved public transport) tax shifting, and tax

incentive components, has been included to mitigate distributional impacts and aid political acceptance.

In addition, it is proposed that revenues raised from the tax be recycled back into the economy to help

address any potential negative impacts on the welfare of poorer households.

Numerous deviations from a uniform price signal reduce the effective tax rate significantly in

the first phase. In an idealised policy environment, a single price signal across the whole economy

would in principle be the most efficient way to internalise the carbon externality, together with other

instruments to address R&D market failures and other externalities 37. In practice, decarbonisation

incentives become mixed with other policy objectives such as addressing fuel poverty and protecting

industrial competitiveness. Also, some sectors may be less responsive than others to carbon pricing;

for example, if there are relatively few affordable decarbonisation options, or where carbon pricing is

less salient to decision-making due to various non-price barriers. These factors can reduce the

effectiveness of price direct economic signals on their own, and point to the need for other types of

policy intervention.

In South Africa, although the tax rate is meant to be applied across all sectors at a consistent price

level, in practice the many deviations mentioned above reduce the effective tax rates to significantly

less than the original R120/tCO2e. For example, even assuming zero offsets, the maximum effect ive

tax rate in the electricity sector after the allowance would be R48/tCO2e or US$ 4/tCO2e in the first year.

35 Hughes, R., and Paterson, A. (2017). A Critical Rev iew of South Af rica’s Future Carbon Tax Regime. Institute f or Marine and Env ironmental

Law Univ ersity of Cape Town. MPhil Thesis, pp.89. 36 Ward, J., and de Battista, G. (2016). Modelling the Impact on South Af rica’s Economy of Introducing a Carbon Tax. 37 Adv ani, A., Bassi, S., Bowen, A., Fankhauser, S., Johnson, P., Leicester, A., & Stoy e, G. (2013). Energy use policies and carbon pricing in the

UK IFS Report R84 Energy use policies and carbon pricing in the UK.


17

This is about 4 %of that proposed in the Stern Review. It becomes apparent that these factors will in

turn significantly reduce the price signal which the system is designed to generate. This result contrasts

with the intention of the Carbon Policy Paper for the tax to provide a strong price signal and certainty to

both producers and consumers, acting as an incentive for more environmentally friendly behaviour over

the long term. However, consideration should be given to the developing nature of South Africa’s

economy and the need to cushion poor and low income households and certain industries from potential

adverse impacts of the carbon tax and, whilst providing incentives on the margin for changes in

behaviour, allow for a gradual, structured transition to a low carbon economy.

A mixed approach to the point of regulation was chosen to balance efficiency and robustness.

The tax will be placed on fuel inputs (upstream) in combination with a tax on process and fugitive

emissions at source (point of emissions) for some of the large industry players. It will be based on

appropriate emissions factors and transparent and verified measuring and monitoring procedures. This

combination of an upstream and point of emissions approach to carbon taxation offers key advantages

including: i) fewer players involved (and therefore lower costs); ii) a simpler structure, minimising

opportunity for abuse and risk, and; iii) a lower administrative burden by building on existing accounting

systems.38

AFOLU and waste are not included in first phase, but can be a source of offsets. If in the future

these sectors will be covered by the tax regime, and where offset projects overlap with the scope of the

tax, existing projects will be allowed to continue until the crediting period of that project comes to an

end. However, no new project will be allowed to be developed. This preserves the incentive for current

project developers to continue developing their offset projects.

There is still uncertainty about how the overlapping carbon tax and carbon budget policy will be

aligned going forwards. With the first trial phase of the carbon budget already underway, and the

carbon tax planned for January 2019, the government has still to provide clarity on the alignment of the

carbon tax and carbon budgeting system post 2020, when the mandatory phase of the carbon budgeting

system is expected to commence. The two complementary tax and command and control instruments

have very different rationales and mechanisms. There is a desire to understand how the instruments

may be aligned to ensure that South Africa’s mitigation policy is placed on a coherent footing in the

longer term, so that it can help deliver the emissions reductions to which the country has committed.

For the moment there is agreement that the tax will apply above the carbon budget threshold, however

the threshold level is still to be agreed. Further design elements will depend on how the tax

implementation ensues.

While South Africa has the vision for a low carbon transition, the lack of coherence in mitigation

policy creates uncertainty for stakeholders. The vision is enshrined in high level policy documents

(e.g. National Climate Change Response Policy, National Development Plan and South Africa’s NDC).

However, while the development of the carbon tax has sparked a cross-cutting debate about a uniform

decarbonisation signal, the unforeseen overlap between the DEA’s carbon budget’s overlap and

National Treasury’s carbon tax reveals a lack of coordination. Addressing this will be crucial so

stakeholders can understand how the South African economy is expected to evolve and the possible

opportunities from a low-carbon future, as well as the framework and timeframe over which decisions

particularly in emissions-intensive industries need to be taken. The government is aware of this, and

work is underway to develop a Low Emissions Development Strategy, Mitigation Pathways and to

review policies and measures, in line with global requirements and in light of the operationalisation of

the Paris Agreement in 2020.

38 According to a representativ e of the South Af rican National Treasury , directly inv olv ed in the dev elopment of the carbon tax , interv iewed f or this

work


18

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Fakoya, M. B. (2014). Carbon tax implementation in South Africa: Is it the right time?

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https://www.southafricanmi.com/blog-2nov2017.html


20

Appendices

Appendix 1 Timeline of relevant domestic policies and plans39

Legislation Year Developer/

Issuer Description

White Paper on the Energy

Policy

1998

Department of

Minerals and Energy

The paper concentrates on the necessity to decrease the cost of energy and improve its efficiency. This is

canvassed in five policy objectives of: improving access to affordable energy provision; developing energy governance; promoting economic development; managing

environmental and health impacts derived from energy-related activities and securing supply through the diversification of energy services. The paper creates the

policy framework necessary for the energy sector to manage the challenges associated with mitigating against climate change impacts.

White Paper on the Renewable

Energy Policy

2003 Department of Minerals and

Energy

The paper aimed to provide certainty on the future energy trajectory of South Africa and argued for the investment of national resources in renewable technologies in order to

provide for the long-term sustainable domestic renewable energy sector.

Draft Policy Paper

2006

Department of

Minerals and Energy

This document is purposed to structure the necessary

background of the potential role of MBIs, specifically environmental taxes, in furthering sustainable development and environmental objectives of South Africa. It outlines

the avenues for environmental fiscal reform and importantly sets out specific tax elements to evaluate environmental tax proposals. Furthermore, it argues for

carbon pricing by means of a carbon tax to internalise the external environmental costs.

Long Term Mitigation Scenarios

(LTMS)

2007

The Department of

Environmental Affairs and Tourism

The LTMS assesses the mitigation potential of South

Africa’s GHG emissions and creates a long-term climate mitigation policy. The focus is on mitigation options and their prospective costs. LTMS predicts that South Africa’s

GHG emissions will peak by 2020, stabilise between 2020-2030 and decrease from 2035.

National

Strategy for Sustainable Development

and Action Plan (NSSD)

2008

National Framework

for Sustainable Development

The NSSD is based on the understanding that the

economic growth of South Africa should be rooted in sustainability to ensure the protection of the environmental resource base to meet the needs of present and future

generations, underpinned by integrated and efficient governance. This is in line with several principles such as: efficient and sustainable use of natural resources;

integration and innovation; and consultation and participation.

Discussion

Paper on Carbon Taxes

2010 National Treasury

Builds upon the understanding gained in the Draft Policy

Paper of MBIs and concentrates on the economic rationale for the introduction of a carbon tax in South Africa. It is argued that the utilisation of a carbon tax can support the

reduction of GHG emissions at least cost to the economy and encourage behaviour change of firms, industries and consumers

39 Newham, M., & Conradie, B. (2013). A Critical Rev iew of South Af rica’ s Carbon Tax Policy Paper : Recommendations f or the Implementation

of an Of f set Mechanism, (334), 1, 5,14. Retriev ed f rom http://cssr.uct.ac.za/pub/wp/334


21

National Climate Change

Response Policy (NCCRP)

2011 Department of Environmental Affairs

Aims to ensure a synchronized and coherent policy framework to address climate change, as well as, to align and frame efforts in this respect across the different

governmental spheres. the NCCRP outlines South Africa’s plan to manage effective climate change response measures and the transition to a climate-resilient and low-

carbon economy. The NCCRP along with the LTMS are designed to be complementary policy measures to the existing policy framework.

National Development

Plan: Vision for 2030

2011 National Planning Commission

Focuses on a holistic development plan to transition to a low carbon and climate-resilient economy.209 This is through various adaptation and mitigation policy measures

that are focused upon poverty alleviation and equality. The NDP encourages the utilisation of carbon pricing, by means of a carbon tax to mitigate climate change.

National

Strategy for Sustainable Development

and Action Plan

(NSSD)

2011 Department of Environmental

Affairs

The NSSD creates a comprehensive roadmap for strategic sustainable development and supports the implementation of the NFSD. Five key priorities are focused upon in the

NSSD: enhancing systems for integrated planning and implementation, sustaining our ecosystems and using natural resources efficiently, moving towards a green

economy, building sustainable communities and responding effectively to climate change

Carbon Tax

Policy Paper 2013

National

Treasury

A revision of the Discussion Paper on Carbon Taxes, it

accounts for the comments received on the Discussion Paper on Carbon Taxes from a broad range of firms, academics, non-governmental organisations and

international institutions. The paper expands on and frames the particular carbon tax design elements briefly considered in the 2012 Budget Review such as tax

revenue, competitiveness and distributional aspects.

Carbon Offsets

Paper

2014 National

Treasury

Contextualises a carbon offsets scheme as a complementary flexibility mechanism to carbon tax that

addresses climate change and mitigates competitiveness and distributional concerns. The Carbon Offsets Paper largely focuses on eligibility criteria, carbon offset

principles, standards and potential in South Africa

Modelling the Impact

on South Africa’s Economy of

Introducing a Carbon Tax (Report)

2016 National

Treasury

Assessed the potential consequences of a domestic carbon tax. The focus areas are environmental effectiveness, competitiveness concerns and distributional

aspects

Integrated Energy Plan

(IEP)

2016 Department of Energy

Related to the White Paper on Energy Policy It is a planning framework that sets the roadmap of South Africa’s future energy mix which guides energy infrastructure

investments and policy development. IEP is guided by a number of key objectives. These are: to ensure security of energy supply; minimise energy costs; promote the

creation of jobs and localisation; minimise negative environmental impacts from the energy sector; promote the conservation of water; diversify supply sources and primary

sources of energy; promote energy efficiency and increase the access to modern energy


22

Integrated

Resource Plan Update (IRP)


Focuses on the electricity-related features of the IEP. It outlines South Africa’s expected long-term energy demand and sets out how this demand can be met with supply

through capacity generation in the context of climate change and the need to reduce GHG emissions.

Draft Post-

2015 National Energy

Efficiency Strategy


Aims to balance the increasing energy demand with the

improvement of resource use and the reduction of associated GHG emissions. Furthermore, the focus is on energy efficiency improvement by employing fiscal and

financial incentives, a comprehensive legal and regulatory framework and enabling processes.

Draft Carbon tax Bill

2017 National

Treasury

Iteration of the first Carbon Bill, published for public

consultation. Following industry comments it seems that

reporting on GHG emissions will be required on an annual basis both for inventory purpose and also to check what

data companies are submitting in terms of their GHG emissions reporting

Appendix 2 Sources of income per industry within trade in South Africa . Source: South African

Market Insights, 2018

Largest contributors to each industry within trade is as follows:

• Wholesale: Building materials and hardware (32%)

• Retail: Food and beverages (42%)

• Motor Trade: New vehicles (33%)

• Accommodation: Accommodation (59%)

• Food and beverages: Food and snacks (81%)

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